Saturday, July 20, 2013

NBS:Electricity price increase should not affect inflation

7/19/2013 11:50:00 AM
BELGRADE - Nebojsa Savic, president of the Council of the Governor of the National Bank of Serbia (NBS), has said that the announced increase in electricity price should not affect the inflation projection and cautioned that any hesitation in the process of government reshuffle might emit "a negative signal" to the market.

Savic said that, when projecting inflation for this year, the central bank predicted electricity price adjustment, so the increase of 10.9 percent announced for August should not affect the inflation projection. As he put it, the effect of the price increase will have a double effect - direct, at the time of the price increase, and secondary, which arises in the next month, implying transmission of the wave of price increase to other products. Stating that Serbia is constantly inflation rate "inglorious record holder", Savic added that the Council and the NBS management are determined to get to grips with the matter. 
 "This means that we should enter the corridor by the end of the year, that is in October - the corridor (inflation rate) being 4 ± 1.5 percent," he said, adding that stability cannot be established just with measures of monetary policy, because it is important for the monetary policy to get the support of other policies as well. Asked how the announced government reshuffle can influence the domestic currency, Savic said that the reshuffle process has started and that it would be good for it to be finished as soon as possible. "Any reluctance might emit a signal to which market entities could react negatively, and we have already had some experience with that," Savic said, and added that any delay in the reshuffle might be that unfavorable signal. Photo Tanjug, R. Prelic (archive)

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